City Limits Magazine, June/July 1981 Issue

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ACITYVIEW

DisplacementExaDlined: From

Both SidesNowBy TOM ROBBINS

Displacement by Ricbard LeGates and CbesterHartman. A report of tbe Legal Services Anti-Displacement Project. February, 1981. Available inlimited supply for $5.00 from tbe National Housing Law Projec t, Suite 300,2150 Sbattuck Avenue, Berkeley, California 94704. Tbe report willbe publisbed in tbe July issue of Clearinghouse

Review, and reprints will be available from tbeHousing Law Project. Displacement: How to Fight

It, an action guide for community groups and

legal services advocates, will be available Summer,1981, also from tbe Housing Law Project.

CITY LlMITS/June.July 1981

Displacement is such a vast phenomenon that it has,

up until now, almost defied full analysis and com

prehension. Displacement is at once illegal evictions andrent gouging; harassment and service cutbacks; co-opand condo conversions; "brownstoning" and "gentrifi

cation." I t is also, prominently, government loan pro

grams that accommodate the middle class and disinheritthe poor, and a rapidly escalating housing market that

rises in costs as quickly as it constricts and tightens in

availability.That all-encompassing nature of the problem has also

made it the stiffest opponent in the struggle to

resuscitate ravaged neighborhoods. What success couldbe more hollow than to have saved a community, yet to

have lost its people?

But whatever difficulty community activists have hadin grasping the totality of displacement and all its ramifications has been compounded by a government predilection to dismiss the problem as overblown and rela

tively insignificant. A little over a year ago, New YorkCity's housing commissioner was asked if he saw displacement as a major problem confronting the city.

"Displacement?", responded the commissioner. "No.Aside from some conversions maybe. I f it's a problem

then people aren't telling me about it."In terms of government officials, the commissioner

was not alone. Despite several years of tenants and com-



munity organizers sounding the alarm over the new and

different forms that displacement was taking, govern

ment has been slow and reluctant to take the warnings

seriously. That .disinclination was heightened, and the

official skepticism confirmed, when the federal Department of Housing and Development's official report on

displacement was released in February of 1979. That

study emphatic:ally stated that the problem was not of

"significant proportions." The HUD study was man

dated by the Housing and Community DevelopmentAct of 1978 which called on the agency to report on the

nature and extent of displacement and to construct a

course of action to help remedy it.

The resultant report contained five basic findings:That (1) many A m ~ r i c a n s : - 20 percent of the .country's

households - move every year, and (2) of those, four

percent do so because they are displaced. And, (3) of thefamilies that are displaced, government programs are

responsible for only one fifth of the moves. Further, thereport held that (4) housing abandonment and neigh

borhood disinvestment account for a great deal more

displacement than revitalization/gentrification. In fact,

HUD found that (5) there is a mere trickle of revitalization by middle income people in neglected urban areas,

far too insignificant to slow or reverse the continuing

movement to the suburbs.

In the interim period since the HUD report, community activists confronting the problem have been frus

trated as government officials have responded to theircomplaints with citations from the HUD study, offering

it as a final word on the topic.

Later in 1979, a supplement to HUD's report "soft-

ened the tone" somewhat, affirming that in some places

at least, displacement was a major problem and, as theauthors of the Legal Services report mention, a Spring,

1980, letter to big city mayors from HUD Assistant

Secretary Robert Embry asked municipalities to addressthe displacement problem "i n a sensible way locally."

Still, the government's basic word on the subject has

been the February, 1979, study and will remain so,unless later this year when HUD must report to Con

gress again, it is significantly altered.One of the purposes of compiling the Legal Services

Anti-Displacement Project report was the hope of in

fluencing that agency's view as it prepares that statement. But a deeper, and long range purpose was to

address a need which Legal Services clients and their at

torneys named their number one priority for analysisand research.

W hether HUD's position is altered or not on the

basis of the Legal Services report and otherresearch, this study, along with a companion guide

book, soon to be released (Displacement: How to FightIt), will have served its purpose by giving tenants and

organizers an overview on the depth, complexity and

scope of the displacement phenomenon currently confronting lower income urban America.

The study is an overwhelming repudiation of whatwas a myopic and wrong-headed analysis of HUD. The

government asked the wrong questions and misinter

preted the answers. Charitably! authors Richard

LeGates and Chester Hartman say the federal housingagency has a tendency to "focus on trees rather than

forests." A less kind analysis of HUD's earlier reportmight arrive at a harsher interpretation.

LeGates and Hartman, using the same studies HUD

. looked at, as well as a number of others completedsince, reached a number of basic conclusions in sharp

contrast to HUD. The new report, say its authors, "is

almost totally in opposition to the HUD view." Theyfound that:

3

• 2.5 million - over one million more than HUD cited- are involuntarily uprooted annually. The figure, they

caution, is probably a very conservative estimate. In

cluded in that number is one large category of moversomitted by HUD: those driven out by their inability to

pay higher rents. (HUD mentioned the problem but declined to give a number.) An<?ther forgotten category,

also left out by HUD, are those driven out of neighbor

hoods indirectly by private or government actions whichupgrade the area.

• Displacement brought on by government action is

substantial and growing, says the Legal Services analy

sis, although such displacement is almost totally ob

scured by the mix of public and private enterprises. A

prime culprit is the Community Development Block

Grant program, says the report. Continued on p. 22

( CITYUMIlS)

CITY LlMITSlJune.July 1981



A Game of Numbers

In HarlemTo the city it seemed like a good idea to embark on a pilot lottery project to sell off 13vacant Harlem brownstones. The demand for the buildings waS heavy, and weightingthe drawing towards local residents would ease charges of promoting gentrification.So far, however, opinion is divided and many residents view the lottery as a bad bet.

By SUSAN BALDWIN

The row of small homes on West l38th Street in

Hamilton Heights puts a smile on the face of Harlem that looks out to the Hudson River. Clean andsparkling, the building and home repair tools that makethem so are everywhere in evidence. Lois Penny, a tiny,wiry young homesteader on the block, who has made it'her business to reclaim her neighborhood for the remaining inhabitaDts, points to the street outside andsays, "These cracked sidewalks will be repaired right

. now and that's it." Hope for a neighborhood renais

sance is most apparent.A 28-year-old activist, Penny cut her organizing teeth

in her battle against the school system of Columbus,Ohio, where she won a landmark school discriminationcase. Her social struggle, begun as a high school student, is still very much alive. "They have to be kiddingus when they say they won't fix the sidewalks up here,"she asserts, exuding the determination of a feisty urbanwarrior. "The city's construction company, not thepeople, did this, they broke up everything. And theyhave to fix it or we'll sue. We have rights, and we're notleaving. r stood up to the gangs here, so I certainly cantake on the city."

Penny is part ·of a growing Harlem constituencywhich fears that the city has plans to displace neighborhood residents who have managed to hold on in their

housing in this celebrated section of the city while itplaces in motion plans to sell by lottery 13 vacant cityowned (tax-foreclosed) buildings within the historicMount Morris, Hamilton, and Strivers Row landmarkdesignated district.

The residents of this deteriorating landscape see this"pilot" lottery as auguring their future in Harlem -massive displacement and relocation, ending in gentrification in the very near future. They contend, - and aresupported in their allegations by some former city hous-

CITY LIMITSlJune.July 1981 . 4

ing officials, - that city services have been consciously

diminished t.o make way for housing abandonment thathas led to city ownership of more than 7,000 propertiesin Harlem. And now, they argue, the area is ripe for theplucking, arid "Brownstonemania" has begun withwhat many cynically view, the city's blessings.

Under the guidelines of the proposed lottery, according to city h9using officials, the lowest annual salarythat would be considered feasible for rehabilitating andmaintaining this housing would be $18,000, but incomesof anywhere from $40,000 to $50,000 would be deemedpreferrable for handling the expense of carrying the proposed 20-year, low interest loan and mortgage for therehabilitation costs. Originally scheduled to be attachedto the possibly doomed federal Section 312 loan program, interest rates would range from three to nine percent, and the maximum allowable rehab loan for eachunit would not exceed $27,000. Even though the city's312 loan pot has dried up, the city still plans to followthe 312 income eligibility guidelines and hopes to findspecial funding to cover the 13 buildings in its 1981-82Community Development allocation.

Based on the format of another lottery of city-ownedbuildings held two years ago under the aegis of the

Harlem Urban Development Corporation, a neighborhood-based nonprofit firm, the city's pilot proposal

weights the bidding three to one in favor of currentHarlem residents. But critics contend that this favoritism will make little difference as local residents will .beoutnumbered and out financed by more affluent "out-

siders." The 16 brownstones earmarked by HUDC presently stand vacant while prospective owners wait anxiously for the city to put together a financing package.They had hoped to take advantage of the 312 program.They have also found it impossible to attract contractors who will do work within the required financial



:

~ ~ _ ; ; J

Lois Penny explains the anti-lottery to Dr. Samuel Jenkins, a 28-year resident oj228 West 139th Street on Strivers Row, between

Adam Clayton Powell Boulevard and 8th A venue.

limits of the mortgage ceiling.

Some 2 ~ 0 0 0 applications have already been received,

most of them from outside the districts covered by two

Harlem community boards that oppose the scheme,

since the city announced its intention to hold this speciallottery of 13 brownstones. When and if the event is of

ficially advertised, city observers expect to receive at

least 5,000 to 6,000 applications. But the group, headed

by Penny and known as the Anti-Lottery Committee,

predicts that a:t best only 200 local residents will apply

because of the income stipulations.

Why are so many of the local people shunning the lot

tery? The answer is simple. After two large and often

raucous public hearings where hundreds of neighbor

hood residents voiced their fears of displacement and

gentrification, members of Community Boards No. 9

and 10 which cover West and Central Harlem voted

overwhelmingly to oppose the lottery in favor of a directnegotiated sale of the properties as is permitted underthe state's 1979 Urban Development Area Action Plan(UDAAP). This legislation gives the city the authority

to negotiate sales of tax-foreclosed (in rem) properties

to private individuals, firms, or corporation (for-profit

or nonprofit), offering a tax exemption as an added in

centive for development. Community residents favor

this form of sale as, they maintain, it is the only way

they will have a fair chance to purchase the brown-

5

stones.

City housing officials who admit that the lottery is

touchy issue argue that the Harlem residents should ac

cept this method of sale because it favors them. Unde

the terms of the lottery, the name of each eligible prescreened Harlemite will be entered three times, whil

bidders from outside the area will only be allowed on

chance. All applicants will be scrutinized with regard t

their income eligibility and credit worthiness.

"I keep hearing them say just limit it to Harlem

don't let anyone else in, and I don't think this bes

serves anyone," said Deputy Commissioner Rober

Davis of the city's Department of Housing Preservatio

and Development, the department's highest rankin

black official. "I am for inclusion rather than exclusioof participants." He also said that, in his estimation, i

would be "illegal," or unfair, or inappropriate for th

city to dispose of its properties through this restrictivnegotiated sale process. In addition, he argued, if thcommunity is successful in blocking the lottery system

the city might resort once again to the unpopular publi

auction block to sell of f its in rem holdings.

Commenting on the legality of conducting negotiate

sales with area residents, Peter Marcuse, chairman o

Board No. 9's housing committee, said, "I never hear

of [the city's] corporation counsel ruling them illega

They negotiate sales every day under UDAAP." Allud

CITY LIMITS/June-July 198



ing to the city's concession to include Harlem residents'names three times in the lottery, he added, "We agreethat they have done a little bit for the folks here, but we

would like them to do more . . . We might settle for aratio of 1,000 to one. Seriously, our real concern is

about gentrification once some of these areas haveturned the corner."

Marcuse also said that he thought the city was tryingto get as much money as possible for the property rather

than using it as a much needed housing resource for thepeople in the area.I n its presentation to the City Planning Commission,

Board No.9 has proposed an eight-point alternativeplan derived from some of the suggestions of a recentcritique from the Anti-Lottery Committee. In additionto advocating negotiated sales as the vehicle for disposing of the brownstones, it also calls for: giving firstpriority to current neighborhood residents and secondto former Harlemites; a commitment to employment of30 per cent minority contractors and workers in therehabilitation; continued occupancy by the buyer forfive years (the city requires three years); evaluation of

potential buyers by the community boards; a purchaseprice of $250 per unit; the provision of city financing to

the extent necessary to permit buyers with incomes from$15,000 and upwards to purchase; and the presentationof specific present and long range plans by the prospective owner.

Under the city's regulations, applicants are being offered the brownstones at prices set by city appraisersranging from $5,000 to $42,000 and are being asked tocorrect certain major violations on the buildings beforethey can receive the low interest government loans.

"It's ridiculous to make people spend all that money,

maybe their life's savings, on these repairs before theybegin the .actual work," said Lana Connor, the localDemocratic Party district leader who opposes the lot-

tery. "People could lose everything that way and stillnot get the loan money because the 312 program doesn 'texist anymore or because they don't make enoughmoney to qualify for it." Connor is one of the few politicians to oppose the lottery.A more powerful local legislator, Councilman Fred

Samuel, stands four square in favor of the lottery."I am a clear proponent of the lottery and have been

for a long time," said Samuel, Democrat of Manhattan,who represents the district where the lottery is to be held.

"Someone has to finally say, let's bring some stabilityto our community. You just can't purchase a brownstone if you're poor. You can't retain one if you're earning $10,000. Those who scream that this is a giveawayare being hypocritical, misleading, and fradulent. I t

takes $50,000 to $75,000 per floor to payoff the debtservice loan . . .We need all kinds of people, even brownstone owners, to revitalize Harlem. What the community boards did by voting down the lottery was irresponsible." Another powerful local figure, though less vocal

CITY LIMITSlJune.July 1981 6

on this issue, Congressman Charles Rangel, Democrat

of Manhattan, also advocates the lottery for selling thecity's in rem properties.

The community boards' late rejection, and, in the

case of Board No. 10, its reversal of an earlier vote insupport of the lottery, can be attributed to the thoroughleafletting and lobbying of the Anti-Lottery Committeewhich was responsible for the large attendance at thetwo public hearings.

The residents' questioning of the high income eligibility rates for participation in the lottery is supported by arecent critique of the 312 loan program issued by CityCouncil President Carol Bellamy's office. Her reportalso calls for placing "lessened emphasis upon creditworthiness and more upon assisting stable low incomeapplicants to qualify" for these loans.

In a financial fact sheet explaining income eligibilityfor the purchase of two of the brownstones - 317 Convent Avenue and 473 West 141st Street with askingprices of $14,000 and $35,000, respectively - the cityestablished minimum salary requirements for lotteryparticipants. In the case of 317, a purchaser would haveto earn at least $23,000 if the building were divided intothree apartment units, and $26,000 with four units. For473 West 141st Street, income requirements would be$25,000 for three units, and $46,000 for four units.I .consider myself middle class, but I don't know

where they get their figures. They're ridiculouslyhigh," asserted Lois Penny, who owns two brownstones inthe 6OO-block of West 138th Street. "One of the problems here is that the city wants to pick the architect andthe contractors, and we know what kind of work theyget - it's always terrible. People can do a lot of the

work themselves and save money." Davis, on the other

hand, said that the city does not force the lottery bidderto use the city selections, that the potential buyer is freeto use other choices.

Two years ago two homesteading women attemptedto buy 317 Convent Avenue for $250-a-unit from thecity, only to be turned down because some homeownerson the block complained to the city that the price wastoo low and that the building could be sold for at least$50,000. Now, two years later, the building, nestledamongst neatly manicured brownstones, is still vacantand an eyesore showing signs of accelerated deterioration.

Penny and her committee believe the $250-a-unit

price is a fair one and are organizing the grassroots element of the community to fight for negotiated sales at

that price.I f the planning commission puts the lottery issue on

the Board of Estimate calendar as it is expected to do,following the required Uniform Land Use Review Procedure (ULURP) for disposing of city-owned property,lottery foes in large numbers plan to attend the board'spublic hearing late in June with the hope of defeating it.A quick poll of key board members did not reveal what



the outcome would be. One crucial board vote, that of

Manhattan Borough President Andrew Stein, is still up

in the air, according to his housing specialist VickiStreitfeld. Terming the issue "tricky", she said, "I haveno idea how it will turn out. This is hard. There are no

real good solutions."T he possibility that the lottery will be approved hasmajor political as well as social implications. Since its

conception, the pilot proposal has raised numerous imponderables, yet to be ironed out. "Two years ago whenit was in the planning stages, the city was crying 'Sell,sell, sell,''' said Jeffrey Heintz, former assistant commissioner of rehabilitation. "There were all sorts of

complications to getting a sales policy in place, and

there were many sensitive political difficulties to proposing an auction in Harlem. So, we arrived at the ideaof the lottery for the brownstones whose financingwould be tied to outside government financing. Of

course, we were rich with 312 funds then. This seemedideal because it would permit moderate income peopleto compete for the much wanted brownstones."

Alluding to the tragedy of the 312 funds drying up, hecontinued, "Now that the city has put this pilottogether, the funding will be difficult, if not impossible,without the involvment of the private sector." He alsosaid that another large problem was the scarcity of

brownstones for the great numbers who want them."How do you choose who will get them," he asked."Who does? The community board? I think to restrictthe sale could be unconstitutional. This whole process is

a thankless job."

Should this pilot project be carried out with any success, the city may opt to dispose of Harlem's estimated250 other brownstones in the same way or it could rein

stitute its auction policy."The lottery may not be perfect, but I would caution

the community against getting up in arms and fightingit," said one locally involved planner. "From what Iobserve," he added, "the boards are killing themselves.This is the best they' re going to get from Koch. I'm surethe private applications are sitting there ready to go, andno doubt the price will be right - high."

Davis also warned that those who think the lotteryspells gentrification should know the real threat is notmuch further down the road. "The city is not out to getthe community . . . What I worry about is when we get to

the sale of multiple occupied dwellings and rent restructuring," he said. "That's when the displacement issuewill be key. And it's what happens with those dwellingsthat will ultimately determine what the character of

Harlem will be because that's where our people are."

•

T he settlement of Harlem by blacks in the early1900's was not without bitter struggle. Home to

white gentry like Commodore Vanderbilt and RussellSage who showed thoroughbred horses and played polo

7

in the famous polo grounds, Harlem was first populateby black aristocrats. The new colony expanded rapidlyspreading from two houses on Fifth Avenue acrosLenox Avenue to the fashionable St. Nicholas Par

area, eventually taking over the celebrated StriversRow, where one of the 13 city-owned brownstones is being offered in the lottery for $42,000. Fearful whithomeowners, reacting to the rapid influx of blacksformed a property owners association in an effort t

keep out this wave of new residents . They tried to ustheir large political and financial clout to keep the newunwanted Harlemites from getting credit from banksThe rest is history. Blacks looking to settle in Harlemwere forced to confront violence, redlining and sociacastigation by neighbor's and newpapers. Still, block bblock, blacks won the right to reside there ..

Now, 80 years later, the residents who call Harlemhome are concerned that this history will be reverseand do not see the issue of the 13 vacant brownstones a

being insignificant - the picture painted by the city"We understand that this is just the beginning," Penn

emphasized. "That is why we must win this fight. Othewise, substantial numbers of residents in the larger buildings will be run out by speculators and developers." 0

317 Convent Avenue, one 0/ he 13 brownstones proposed/or

the lottery.




The Changing Face of Norfolk Stree

Norfolk Street, looking north from Stanton. 166 Norfolk is at right.

By TOM ROBBINS

The Lower East Side has gone through a number of

well-chronicled evolutions, moving with aches and

growing pains from one burgeoning group of immi

grants to a new one. Most recently, the area just north

of Houston Street and south of Fourteenth Street

(known variously as Loisaida, the East Village or

Alphabetton depending upon perspective) has received a

good deal of attention as a possible site for gentrifica

tion. Activists there have pointed to numerous examples

of speculation by both large and small entrepreneurs.

So far, however, little attention has focused on the

area just below East Houston Street, a stretch of turf

where, even in the 1960s when large numbers of whites

sought cheap apartments in the "East Village", few ventured amidst Pitt, Ridge, Attorney or Clinton Streets

where a predominantly Hispanic population resided.

Building decline. landlord abandonment, urban renewal

and demolition claimed a substantial chunk of the tene

ments there. But the bustling activities of a troupe of

housing organizers in the Pueblo Nuevo Housing and

Development Association helped to intervene in the de-

CITY LIMITS/June-July 1981 8

cline of dozens of multi-family buildings, as well as

planning for the renovation and new construction of

hundreds of apartments which will be targeted for local,

low income residents.But the same sort of attraction exists in the Pueblo

Nuevo area as in Loisaida: buildings and land are inex

pensive, the area is a short walk or bus ride from City

Hall and Wall Street and, along Orchard, Ludlow and

Essex Streets, some of the best shopping bargains in the

city are available, along with an old-world flavor much

sought after by today's urban gentry.

Tenant organizers at Pueblo Nuevo have traditionally

come to grips with landlords who have been content to

watch their buildings fall apart as long as the rent checks

are coming in, and even when they are not. The organi

zers' task has been to help tenants put together the legal

and economic toolsto save themselves and their build

ing. Some of that approach has had to be refashioned,

however, as attempts are made to deal with a new phe

nomenon - that of landlords bent on attracting a

higher income breed of tenants.



P aul Stallings began purchasing buildings in the

Lower East Side with a small group of investorslast summer. Since then he has come to own or managesix tenements on Norfolk Street between East Houstonand Stanton Streets holding over 100 apartments in all.He is now the manager and owner - or part-owner insome cases - of every occupied building on that blockas well as one large building on the next corner. He alsoholds a mortgage option on two other mostly abandoned structures on the block, as well as interest in purchasing the block's vacant synagogue.

Stallings's arrival on The Lower East Side has causedmore than a little commotion, although he puzzles as towhy this should be so. A number of residents of hisbuildings, as well as organizers from Pueblo Nuevo,have charged that Stallings has harassed poor, blackand Hispanic tenants out and replaced them with youngwhite students and professionals willing to pay rents twoand three times the previous level. The charges includethreats, bribes, building vandalism and even a threat totenants that the immigration department would be

called to roust any illegal aliens among them.Stallings's six buildings, it is feared, could become the

beachhead from whence a general displacement of lowincome neighborhood residents is launched. "In thepast month," said Margaret Fournier, a housingorganizer at Pueblo Nuevo for more than three years,"I've seen a completely different group of tenants in hisbuildings. All the new ones have been young, white andmainly students." When Fournier first came to 184-186-

188 Norfolk Street late last year, the tenant population,she says, was mainly Hispanic and black, with rentsaveraging $200 per month for four rooms. She estimatesthe average rent now at $450 per month. "Little by little," she says, "there were payoffs to tenants to getthem out."

In another Stallings owned and run building,organizers Miguel Badillo and Victor Castro say Stallings's ownership began with a letter circulated totenants insisting that the immigration department hadordered that no leases be signed with tenants who hadno "green cards." Any illegal aliens, the notice advised,should leave the building, as the new owners didn't wishto be forced to report them.

And at the northeast corner of Norfolk and StantonStreets, 166 Norfolk Street is now almost wholly reno

vated since Stallings purchased the building last year. Ofthe eleven tenants in the building at the time, just fiveremain. Some tenants claim that harassment after Stallings took over included nailing apartment doors shutand sabotaging the boiler. The building now boasts arefurbished boiler, sanded wood floors and copiouscoats of new white paint.

Paul Stallings vociferously denies all the charges.Moreover, he appears genuinely hurt by some of them.Clearly, he is not cut from the same cloth as traditionalLower East Side landlords. A Wall Street lawyer until

9

- ' .

recently, he is young, optimistic about the neighbohood, and both looks the part and speaks the languagof a Manhattan professional pioneering new land.

Becoming a full-time landlord was a "lifestyle" decsion, says Stallings. "I'm not really a white collar kin

of person and being a Wall Street lawyer is not mslyle."

Without his intervention, Stallings claims at least onof his buildings would today be vacated and abandonedsave for the drug trade which flourished there before htook over. His role has been, he insists, to salvage whaslumlords before him had almost destroyed. He affeclittle kinship with the owners who preceeded him"They just milked the buildings, that's all," he says.

The difference between him and them, he says, can bgauged by the money he has spent repairing his stock166 Norfolk has already cost $70,000, he says, money hhopes to recoup from the building's 24 studio and onbedroom apartments. All of his investment has comfrom his own and other private partners' funds, nonfrom the government he insists. (He found one cit

loan program "Designed to discourage.") And some othe labor involved has been his own - "I'm a pretty fai

carpenter and electrician," he says - and his father's professional contractor.

To a large extent, Stallings is the brownstone pionewrit large: he seems to enjoy the manual work involvein running his own buildings, as well as the thought orestoring some faded gleam and still holds a savvy ey

on rising property values. His "lifestyle" shift include

a sharp look around to see what areas and enterpriselooked promising. Becoming a Lower East Side landlorseemed to hold both. He was not oblivious, he says dryly, to the changing patterns in the neighborhood, but h

responds defensively to questions as to whether he seehimself as part of a gentrifying trend. "I don't think itinevitable that every building down here has to becomcity-owned," he says. " I f you define gentrification arenovating dilapidated buildings, then I'm guilty," hagrees. "But I've put my money and my sweat into stopping these places from becoming abandoned shells."

As to the impact of his ownership and the high pricof his apartments, Stallings admits only to a bias towarworking people as tenants and a desire to avoid welfarfamilies. ,"I didn't find them responsible in the past," hsays. Students, however, don't always have jobs, an

many survive on a welfare system of their own. But theare apparently widely welcomed in the Norfolk Streebuildings. The racial changes in the tenancy of hibuildings is also a matter of dispute to Stallingsalthough he could name no Hispanic tenants to whomhe had rented since buying the buildings and only fiveblacks, three of whom were roommates of whites.

•

Sill, Stallings insists, he is being unfairly targeted

The stench in the building right next door to 153

Norfolk (a 30 unit building he owns) is terrible. The




boiler there is always broken and I can tell you of manybuildings on Clinton Avenue that are much worse. Minemay not be the greatest buildings in the world in allrespects, but I haven't seen any efforts by Pueblo Nuevoto organize in any of those other buildings I'm talking

about." I f their goal is to provide the best possible services to

tenants then I'm a little at a loss as to why me - I'm

certainly not the worst landlord around."

Around the corner and two blocks east on HoustonStreet from Norfolk Street in a long open office, threePueblo Nuevo organizers denied that Stallings was being singled out. The housing organization's involvementwith the landlord and his buildings grew, they said, over

a period of months as more tenants from differentbuildings soughttheir assistance. The stories the tenantsand organizers relate are a far cry from the fairly passiverenewal Stallings claims to be carrying out.• In 153-155 Norfolk, a 30 unit building, 16 tenantsrecently formed an association to counter what theydescribed in a letter to Stallings as a "vast disparity

from tenant to tenant, not only in quality of service, butin tactics apparently designed to encourage or discourage tenancy." The association represents a significantchange in its combination of both longtime, generallypoorer and minority tenants as well as newer, better-offyoung whites. Some of those new tenants say they weretold by Stallings that he was getting the "bad elements"out of the building. The new alliance between tenantsrepresents a potentially major stumbling block to anyplans to make further changes in the building's makeup."We greatly resent," the tenants' letter said, "the highlyillegal, at worst, and questionable, at best, tactics usedto shuffle [low income tenants] out."

• At 166 Norfolk, where tenants charged heavy-handedharassment was used to empty the building, a letter wascirculated after Stallings bought the building telling tenants to leave because no services would be provided.Stallings insists that when he bought the building it wasin no shape to house anyone and there was no possibleway to provide services. Tenant organizer MiguelBadillo insists that Stallings's workers damaged the

boiler while it was still functionable.• At 170 Norfolk Street, Stallings says, in the peculiarmathematical lingo of speculators, that he "owns only asmall piece of a second mortgage." There, only three

tenants are left and neither Stallings nor Pueblo Nuevoare attempting to get anything going. When funds areavailable, he said, he would like to renovate that build

ing as well.• 178 Norfolk Street is a building that has almost wholly resisted Stallings since he bought it. A rent strike hasbeen in effect there since last fall and tenants have spenttheir rent monies on repairs for individual apartments.Relations there are the most stormy between tenants andlandlord, and it is also another building where vacant

apartments have been rented to students at rents of $292

CITY LlMITS/June.July 1981

per month for one, and $436 per month for another.The tenants, led by Maria Torres and Ramon Monte of ,

fered several months ago to raise their rents from anaverage of $100 per month to $125 if Stallings would

agree to a list of repairs and a promise to end harassment, including the immigration threats. The agreementremains unsigned. Stallings says he informed tenantsthat he had circulated the "green card" notice at the

behest of the immigration department to fulfill a technicality brought on by the previous owner and that he hastold tenants he would sign leases "with anyone."• 184-188 Norfolk are in the best shape relative to Stallings' other buildings . It is where he has his small officeand where his father took an apartment last year. Thatgood condition, however, has made those buildingshave the most rapid racial and economic turnover, accompanied by cash offers to tenants to move out. As inother buildings, the Pueblo Nuevo organizers have beenable to show new renters previous leases held on theirapartments and have shown that often the rents being

charged are illegally high. That sort of openness with

new renters has helped build a trust between tenants andhas also led to several successful challenges to the rentlevels. Stallings admits there have been overcharges, afact he attributes to the fast-paced turnover of the buildings. The frequent moves, in turn, he attributes to thepeople who have been answering his ads in the Village

Voice and the New York Times - two papers largelyunavailable and unread in the neighborhood.

The new population, say organizers Fournier, Castroand Badillo, is one which must double and triple up toafford the high rents, and in many, but not all cases,have been willing to accept such shortcomings as plasticover the windows, as in one apartment in 178 Norfolk

where the rent is $475, because the stay is only temporary - until the end of the semester, or the next step upthe ladder of career success.

Those changes hold out the prospect of a far differentneighborhood, one which as Dorian Hastings, a tenantat 153 Norfolk and a recent arrival in the area, put it,"Doesn't even create a neighborhood, just a lot of

young, unsettled people."Paul Stallings, along with Pueblo Nuevo, are looking

towards improvements in the area. As a gesture of goodfaith and intentions, Stallings has suggested to MiguelBadillo that they work together on a vacant lot on the

block to create a small park or playground. "He's talking about a vacant lot," responds Badillo, "while we're

talking about the housing the people live in." 0

10



Guerilla War At The Co-op BankI t was a "heist" to put the Great Train Robbery

and the Lufthansa snatch to shame. Nothing hasever approached its magnitude. The take was acool $60 million. After the job, the perpetrators,

displaying the poise of veterans, sent a thank younote to the startled victims.I t may also have been the one and only time that

the steamroller of Reagan administration cutbacksslowed down and backed up, even for a shortspace. No matter how infuriated the treasury andbudget chieftains may have been when theylearned that National . Consumer CooperativeBank President Carol Greenwald had managed totransfer $60 million, representing the remainder of

the bank's allocation for the current fiscal year,from the Treasury to a commercial bank and,worse, was refusing to give it back, they still had

to negotiate. Administration officials, after lettingsome time elapse, let it be known they thought themove highly improper and made rumblings aboutcharging bank president Greenwald with the theft.Although the threat was considered a ploy, Greenwald was prompted to retain ace criminal lawyerEdward Bennett Williams.

But despite whatever accusations were tradedback and forth, at issue was the survival of thebank under the Reagan administration, and the"fund-napping" was one guerilla war tactic inwhat appears will be a continuing struggle.

Legislation to defund and eliminate the bank,initiated in 1978 to provide funding and technicalassistance to cooperative ventures, has been introduced and beaten back by narrow margins. Thecontested $60 million represented money appropriated for the bank by Congress for the remainder of the fiscal year, money which the administration was ~ t t e m p t i n g to recoup. Based on areport by the General Accounting Office that heldthe President did not have the authority to withhold funds that had been allocated without a recission vote by Congress, Greenwald forestalled afreeze on the bank's loan making by switching the

funds from the Treasury to a commercial bank inChicago.

The move prompted some strong debate, including a Wall Street Journal editorial which called thebank "one of those things Jimmy Carter and theDemocratic Congress created for the enjoyment of

the new left. . ." and urged the Senate BankingCommittee to s tamp it out by raising the spectre of

"Mrs. Greenwald funneling money to hundreds of

11

little activist groups around the country."However, the Senate didn't heed that advice.

Some strong and surprising allies there defeatedan attempt to kill it. With the ink still wet on his

proposal to withhold federal funds from localitiesthat have rent control laws, Senator AlphonseD Amato Republican of New York, introducedan amendment in the committee which saved thebank, at least for the present. And, attempts to

rescind the rest of this year's bank funding appearto have died after a joint appropriations conference committee voted to keep the bank's currentbudget as is.

In the interim, the bank has continued to makeloans. Under a compromise agreement with theadministration, the bank returned the hostage $60million and was allowed to make loans against

half that amount representing its third quarter appropriation. Congress's decision will now free up$27 million of the last quarter for other loans.

But if several skirmishes and a number of battles have been won, the war is far from over. Nextyear's allocation is still undecided. And, whileReagan's budget and treasury heads were wrangling over the "stolen" $60 million, the Presidentappointed seven of the bank's 15 board membersto fill spaces left open by the Carter administration. Supporters of the bank have feared that theboard appointments will be the Trojan Horsethrough which Reagan's goal of closing the bank'swindows forever is achieved. However, if that wasthe battle plan, it may have been effectivelythwarted.

According to Mid-Atlantic Regional DirectorPhillip St. Georges, shortly before the Reagan appointments were made, the board voted that anysubstantive decisions - such as shutting downoperations - of the board must be by two-thirdsvote. At present such a majority would be extremely difficult to pu t together.

On June 24th, the bank will hold its a n n u ~ meeting at which time it will elect three stock

holders - representatives of co-ops that havereceived loans from the bank - to the board. Theboard's make-up will then be the seven Reagan appointees, five holdovers from the Carter administration, whom Reagan can replace at any time,and the three newly elected members. The nextthree members will be elected when the bank'sloan portfolio reaches $10 million, which couldhappen as early as next fall. 0 T.R.




Holding The Line

In The Neighborhood By ROBERT SCHUR

In neighborhoods where substantial city-owned property coincides with a ripeningprivate market interest, activists could try a new strategy, argues the author. The aim

is to help low income residents hold on.

A new spectre is haunting many New York City low

and moderate income neighborhoods. Alongside build

ing deterioration and abandonment, newly arrived are

real estate developers, speculators and middle-class "ur-

ban pioneers" with an eye on the neighborhood's future

- a future they believe (perhaps correctly) that they can

make happen. They see themselves getting in on the

ground floor, while land and houses are still cheap, and

in a few years making a quick and effective killing.

One can read the first telltale signs of gentrification in

a neighborhood: the rate of actual abandonment slows

to a trickle; old landlords and property owners who can

.not continue to hold on are no longer simply walkingaway; instead, they are selling speculators who are ready

to buy most e ~ e r y t h i n g in sight, preparing for the still

invisible renaissance. Not so strangely, properties on the

city's tax foreclosure list are being redeemed rather than

allowed to pass into city ownership. And, most often,

the redeemer is a new speculator-owner.

You can read these signs in quite a few places today -

the Lower East Side, Clinton and Manhattan Valley in

Manhattan, Park Slope and Prospect Heights in Brooklyn - even in neighborhoods which one would think

most unlikely, such as West Harlem, Hamilton Heights

and parts of Williamsburg. As the prices of housing,

both new and secondhand, continue to soar out of sight

in the "better" parts of town and in the suburbs, more

and more middle income folk find that they have torevise their plans. Instead of "trading up" to Long

Island or Westchester, they are starting to "trade

down" - to look at older houses in poorer neighbor

hoods which they can afford to buy or rent and to transform into newly-chic townhouse duplexes or triplexes,

cooperative or condominium apartments.

The process has a surface sheen that looks good forrun-down neighborhoods. Older, deteriorated housesget renovated; new money and people come in; the tideof abandonment and depopulation is turned around.

But, allowed to go unchecked, gentrification spells

disaster for the existing, less well-to-do residents. Afterall, the whole notion and aim of gentrification is to in

crease property values. These are translated into higher

prices for homes - whether owned or rented - prices

which, by definition, existing residents cannot afford.


The economics of gentrification alone, wholly apart

from any social, racial or other considerations, producethe displacement of the older population. There is am

ple evidence from what has taken place in other, already

fully-gentrified neighborhoods, that the present laws

(and the ways they are enforced) protecting tenants

from eviction or removal by other methods are quite in

adequate. Nor can lower .income homeowners cope with

higher assessments and real estate taxes on their properties. With eager speculator-buyers at hand, they are

hard-pressed not to sell and move out as well.

The renewal of old neighborhoods, when it takesplace, as is happening today, by private market forces,

produces the same displacement and removal that years

ago brought such well-deserved criticism to government

sponsored urban renewal.

What Can Be Done?

There is, we think, a way to turn the rekindled real

estate sector interest into a development that will produce

only winners. And its basic elements are quite simple.

1. The first premise is that the influx of new money and

new people into the neighborhood is a phenomenon thatneither can, nor should be stopped. Neither the people

already living in the neighborhood, no matter how well

organized they may become, nor the government, with

all of the tools and resources at its command, can put aneffective moratorium on the forthcoming capital invest

ment in the area. Nor is it likely that the city administra

tion would put a very high priority on the needs and

desires of the existing population in the face of the im

minent development of the neighborhood by private

capital and the concommitant increases in tax revenuesthat will certainly accompany such development.

Even more important is the plain fact that , in most in

stances, the community needs the very infusions of

money that housing construction and renovation will

bring, along with new residents with higher incomes and

greater purchasing power. The neighborhood needsmore job opportunities for its unemployed and under

employed residents; it needs more people with moremoney to spend to revitalize its virtually dead retail

stores and services. To halt any development would onlyconsign the bulk of the present population to permanent

poverty, dependence and squalor.



2. The second premise is that there is room for new

growth. Abandonment inevitably spells a substantial

drop in population. Those unable to relocate locally

seek shelter elsewhere, in other communities or doubled

up with relatives. Merchants, neighborhood organiza

tions, even local politicians ,all tend to agree that few

social agenda items can be achieved without a boost inpopulation.

What this also suggests is that there is no need, by rea

son of the present number of residents, to displace anyof existing population in order to make room for new

arrivals. The present occupants can stay, at least theore

tically, and many additional people can be fitted in

around and alongside of them without producing an

overcrowded or even unseemly dense situat ion.

3. There would, in fact, be a distinct advantage in adding

more people, of higher incomes, to the present popula

tion. I f managed well and successfully, the communitycan be rejuvenated by building upon its present popula

tion base and by creating an integrated community. The ·

attracting of middle income and even affluent people to

the neighborhood, if itis

done without displacement,would benefit the existing populat ion in several ways:

• The presence of a higher income segment of thepopulation would spawn a revitalized retail trade in the

neighborhood - not only for existing shops and service

establishments, but for newly-created ones as well. This

needn't be limited to the restaurants, boutiques, antique

stores and the like which will inevitably flourish . In addition, a larger purchasing population would mean the

return of supermarkets, pharmacies, hardware, clothing

and furniture stores. All of these can both preserve

enhance existing local entrepreneurs and create new j

for neighborhood residents.

• The establishment of an integrated community social benefits for the poor as well as the better-o

While the "melting pot" idea has little currency th

days, the breaking down of provincialism that res

from urban ghettoization can be accomplished and

positive outcomes enjoyed without a total foregoing

one's ethnic roots and culture.• The presence of some middle and even upper

come residents will inevitably lead to more effect

demands on the public sector for services that will be

fit the entire community and will spur much needed

frastructure improvements.

4. The key issue, of course, is how can the neighb

hood become integrated - economically, socially, e

nically and racially - without displacement and w

out setting in motion the forces that will (as is happen

elsewhere) transmute the neighborhood from a pove

ghetto to an upper ·class"guildedghetto?"We think

can be accomplished, but 'it will take a conscious comitment and some resources, along with the coope

tion of the public sector and the present residents a

their leaders and organizations in order to do so.

Briefly, and in rather stark outline, the process wo

envision two principal ideas:• Leaving to the private sector the existing, privat

owned housing stock.These properties would be left to the vagaries of g

trification. Presumably a lot of it will be redeveloped

13 CITY LIMITS/June-July



the speculators move in and the job of selling the "new

ly discovered" neighborhood to the city's middle-classheats up.

• Two new things need to be added. One is to providea reservoir of decent, low-cost quarters in the neighborhood into which the present inhabitants of the privatelyowned buildings can be moved as (and preferablybefore) their present quarters become gentrified. This,

we submit, can be done by appropriate utilization of va

cant units in city-owned buildings, plus the constructionof new, low- and moderate-income housing on some of

the city-owned vacant parcels.

The second point that has to be observed is that thepresent occupants must not be forced out of their homesunless and until adequate substitute housing is availableand that they be assured that such housing will be theirsto occupy.

5. In short, there is a need to develop appropriate devel

opmental mechanisms for the city's land and buildings,and to phase in their application, so as to accommodate

the needs of the existing residents and the pressures exerted by the private gentrification movement. Theseproblems should not be beyond the capacities of intelligent planning, nor are the financial resources that will

be required so great as to smack of utopian dreaming.Just by way of preliminary examples:

• The city could establish a policy of designating itsentire inventory of real estate in the neighborhood as a

land bank to accommodate the future needs of low- andmoderate-income residents of the area. To demonstrateits commitment to this program, it should promptly seal

all of the sound vacant structures and demolish thosewhich are unsound.

• The city could, further, on an annual or even semi

annual basis, in cooperation with neighborhood groupsand block associations, inventory the rate of gentrification (Le. sales of properties, applications for buildingand renovation permits, applications for certificates of

eviction of tenants of rent-controlled apartments, registrations of apartments with the Rent Stabilization Asso

ciation and the like) and forecast the need for housinga ~ o m m o d a t i o n s for likely displacees.

• Based on such forecasts, groups of local residentsfacing displacement, under the sponsorship of neighbor

hood organizations, would be encouraged to form cooperatives to acquire, rehabilitate and live in vacantcity-owned buildings or to construct new housing oncity-owned vacant land.

• Financial and technical assistance would be provided by appropriate combinations of the city, thefederal government through its Department of Housingand Urban Development and the National ConsumerCooperative Bank. The city could sell and convey thebuildings or land to the residents' cooperatives on reasonable terms, and might also participate in financingthe costs of rehabilitation through its Participation


Loan Program, or other loan or grant programs to be

designed specifically for the effort using federal Community Development Block Grant funds. The federal

government would assist via targetting sufficient Sec

tion 8 new construction and substantial rehabilitationsubsidies and by assigning priority for federal mortgageinsurance and GNMA-FNMA Tandem Plan (a publici

private financing mechanism), or similar financing to

those projects that can best utilize such assistance. The

National Consumer Cooperative Bank would providefinancing and technical assistance by Title I loans and

through the programs of its Title II Office of Self-HelpDevelopment and Technical Assistance.6. The city might further contribute by developing projects similar to its newly-designed policy of selling pro

perties to consortia of private developers and neighborhood groups where profits from sale of the tax shelter

syndication are contributed to help defray the costs of

the housing developments, thereby reducing the bor

rowing costs and the resultant carrying charges. It couldalso, in appropriate instances, promote Section 235

moderate income housing by making land available andby contributing to the infrastructure improvements, as

it is presently doing in the South Bronx and elsewhere.

We may note, in this regard, that gentrification will

not occur all at once. Most likely, it will move along thebetter streets. The process will be influenced, also, byexternal factors - the state of the economy, the money

market for construction and permanent mortgage loansand even the political climate. But even if we assume 100

percent gentrification of the entire private stock over alO-year period, we are not talking about rehousing someunmanageable number of households per year. Assuming 700 families need assistance each year, at present

costs, and assuming a mixture of new construction, substantial and moderate rehabilitation programs, the dollar magnitude, for construction and renovation, is in theorder of $25 million per year. Between COBG loans andgrants, the leveraging of private financing and public intermediaries, the involvement of the Co-op Bank, the

reinvestment of tax shelter premiums and, hopefully, ahealthy dose of self-help "sweat equity," these costs caneasily be met, without damage to plans and programs

for other needy neighborhoods.

To eliminate hardship through forced displacementwhen it occurs, the City might consider a combination

of strict enforcement of the anti-eviction and harassment laws and regulations plus the designation, via theZoning Ordinance, of the neighborhood as a special"Gentrification District," with special provisions andrequirements on private owners to insure against improper removals of existing tenants. The city might also

contract with local groups to publicize to tenants theirrights and remedies and to act as watchdog over the"gentrifiers.'

Finally, agencies concerned with economic develop-



ment, including the Co-op Bank, could 'encourage andassist local businesses and residents to secure thenecessary capital and entrepreneurial expertise to expand and regenerate existing ,and to create new retailbusiness and service enterprises to meet the demands of

the resurgent neighborhood.Thus, the city, in cooperation with the federal govern

ment and the Co-op Bank and by each leveraging theothers' resources, can turn a disaster into a positive

resource. The neighborhood can be reborn as a planned,integrated, healthy and viable community. By thesekinds of cooperative and coordinated efforts, the citywould, in the long run, reap far more fiscal and otherbenefits than can be realized from immediate sales of itsproperties to private realtors and developers. Reservingthe land and buildings it now owns for phased re-development as low and moderate··income housing and coordinating such re-development with assistance for theeconomic improvement of the area and its residents, thepublic sector costs attendant upon the displacement of

thousands of poor, indigenous households will beavoided,and a healthy, stable and truly "model neigh

borhood" can be recreated. ·0

Robert Schur is a consultant to neighborhood housing

organizations. An earlier version of this article was pre-

pared for the conference on Alternative State and Local

Policies.

City Requests$276.5 Million

in Federal CommunityDevelopment Grant

Housing programs in New York City, the vask bulk of

which are fueled by federal money, will remain fundedat the same overall level as last year if the city's requestfor a $276.569 million federal Community DevelopmentBlock Grant is approved. In past years once overalllimits have been set, the city's proposal has been approved as is with only slight alterations.

There are no major changes from last year in thebudget as written at this point. Some housing programs,such as rehabilitation loan funding, incll.\ding Participation and Article 8A loans, will come out slightly aheadof last year's levels once funds from other sources, including unspent surpluses are added.

Perhaps the most controversial use the city would putthe community development funds towards this year is aDrought Emergency Program - a one -year expenditureof $7 million to detect leaks in the city's water system.

Critics have suggested that the use of federal funds frthe block grant is inappropriate since cities are not sposed to use the grant to replace normal maintenaand the primary benefit from the funds is supposedgo to low and moderate income people. Cities, targue, would normally be expected to spend their orevenues on such projects.

Within the alternative management programs for cupied city-owned buildings, which are wholly fun

from the block grants, there are some inter-programmtic shifts, although the overall level is increased fr$30.84 million to $32.27 million. No funding requeare made for a management or a rehabilitation progroperated in conjunction with the New York City Hoing Authority. Last year, $3.5 million was allocated the programs, but in the past year they have fallen frfavor at official levels both within the Housing Authity and Housing Preservation and Development.

The budget also reflects a long-threatened shiftbuildings from one management program to anothThe biggest chunk of alternative management monespent in the Community Management program sch

uled to be reduced from $14.5 million to $10 milliLast minute lobbying by community groups could crease that figure to $12 million. The housing depment has threatened to transfer some participatbuildings and community groups into programs whfewer dollars are expended per apartment. Sogroups, possibly two or more, could be moved iManagement in Partnership, a program where an oside professional management company directs operations of a "junior partner", the community orgization.

The Tenant Interim Lease program, under which tants of a city-owned building lease and manage building themselves, is scheduled to be boosted frommillion to $5 million. That increase, however, is virtuly already spent say agency officials, and still leavesroom for new entrants into the program.

Those occupied Gity-owned buildings which are noalternative programs will receive a very slight increasefunding. Repair and rehabilitation of the buildings wget slightly over $1 million more - from $l3.3 millto $14.4 million. Again, with at least 2,500 occupapartments recently taken by the city for back taxesManhattan, and an estimated 4,000 occupied unitsthe Bronx to be taken sometime late this y e ~ t r or ea

next, the amount allocated will still fall far short ofneed. According to Deputy Commissioner WilliEimicke, the property management section of HPD walso have a 4 percent cut in staff under the budget.

A non-housing segment of the community develoment budget, economic development programs, wreceive a significant raise of almost $4 million in funIn the past, critics of the city's economic developmefforts have insisted that few, unskilled or semi-skiljobs have been produced from the city's efforts. 0 T.

15 CITY LIMITS/June·July 1



Reinvestment: Enter The Commercial BanksAnti-redlining activists took their initial aim at local savings institutions and helpeddevelop a new awareness of community responsibility. But in New York Gty, little

attention has focused on how to get a piece of the $14 billion in commercial bank coffers for local mortgages until recently. The dialogue has now begun.

By TIM LEDWITH

This spring, at the regional Federal Reserve Board offices in lower Manhattan, a little bit of history was made.

When residents from a number of New York Cityneighborhoods sat down with representatives from thecity's twelve richest commercial banks, as well as ranking staff from the banks' federal regulators,it was clearthat precedent was being broken. And, on the tablebefore the participants was a proposition which, in thefinancial establishment's eyes at least, might well beseen as revolutionary: the release, in the form of mort

gage lending for New York's multi-family homes, of asignificant portion of nearly $14 billion in local depositsheld by the commercial giants .

The meeting's results so far have not been too radical,but two commercial banks - Manufacturers HanoverTrust and Chemical - have expressed a willingness toconsider on a case-by-case basis the conventional financing of system repairs in multiple dwellings (buildingswith five or more apartments). Though a far cry fromthe estimated $9 billion in mortgage lending that wouldbe needed to stabilize New York's neighborhood housing stock, that willingness has generated a sense of

guarded optimism among many neighborhood residentsand activists.

A decade ago, when bank redlining was first gainingsteam as a credible urban issue, much of the struggle forreinvestment focused on savings institutions. And withgood reason. Owners of both one-to-four family homesand mUltiple dwellings traditionally turned to savingsbanks or savings and loan associations to finance building purchase and repairs.

Over the last few years, however, the cycle of risinginflation and spiralling interest rates (or is it the otherway around?) has put a genuine squeeze on savings institutions. The gap has steadily widened between the value

of old money (the low interest from long-term mortgages granted in the years before inflation and interestrates began to skyrocket) and the cost of new money(now at about 18 percent for the banks and over 2 percent for their customers).

The New York commercial banks, with their diverseinvestments and sizable stake in world trade, have fargreater assets than their savings counterparts. Chemical

Tim Ledwith is the editor of Peoples Housing News. thequarterly publication of the Peoples Housing Network.

CITY LIMITs/June·July 1981 16

Bank alone is worth about $39 billion. As a result, andwith the impetus of the 1977 Community Reinvestment

Act which mandates that both savings and commerciallenders must ascertain and meet their communities'credit needs, more and more property owners have lately turned to the commercials for financing. Thoseowners, that is, who can stomach interest rates that aremore than double New York State's old usury ceiling.

But the commercial banks have been slow to acceptnew obligations. In 1979, among the top five commer

cials - Chemical, Citibank, Manufacturers HanoverTrust, Chase Manhattan, and Bankers Trust - a totalof 11 multiple dwelling loans were granted city-wide. All11 were made by Chemical and Citibank, mostly for coop and condominium financing, and none were withinthe low and moderate income range: two multi-familyloans granted in Manhattan amounted to $14 million; a

single Citibank loan in Queens matched that figure.Last year, the twelve biggest commercial lenders grantedan unstaggering $6.6 million in multiple dwelling loanscity-wide. And half the banks - Irving Trust, NationalBank of North America, Bankers Trust, and Chase

Manhattan - made no such loans.Meanwhile, the banks' federal regulators, as far asmany neighborhood residents were concerned, were lessthan zealous in their role as CRA enforcers . In one caselast year, the local Federal Reserve office approved anapplication to open a new midtown branch made byChemical over the strong objections of residents in theGreenpoint-Williamsburg section of Brooklyn. Arearesidents had legally challenged the bank's application,citing the fact that Chemical granted five mortgage

loans in the entire north Brooklyn area between 1975

and 1979, this while neighborhood residents deposited$33 million at the bank's three local branches. Marie

Leanza, a community leader in Greenpoint-Williamsburg, reacted angrily to the Federal Reserve's pronouncement tht Chemical has been "relatively active"in the conventional mortgage market and therefore hadnot violated the CRA. In a letter to the regulatory agency after its Chemical decision last summer, Leanzastated frankly: " I f this is the manner in which . . . theBoard continues to process applications, strongmeasures will have to be taken to penalize this agencyfor failing to meet their Congressional mandate."



Such was the atmosphere in which a city-wide reinvestment task force called the Coalition Against Redlining pressed for and got its first meeting with FederalReserve staff - including regional Director AnthonySolomon - last fall. CAR members pressed the agencyat that session, and a subsequent one, to firm up itspolicy for enforcing the reinvestment law. But it becameclear to both parties that no discussion of credit needswould transcend abstraction without the participationof the commercial lenders. As one CAR member aptlyput it, "You can talk about Thanksgiving dinner all youwant,but at some point you have to start talking turkey."

So, with the helpful nudge of an invitation to thecommercial institutions from their federal regulators,the stage was set for an April meeting.

•

About 50 people gathered at the Federal Reserve office on April 9th, including bank representatives (overwhelmingly white and maie), neighborhood residents(of various colors, s l i a P e s ~ n d sexes), and a battery of

employees from both the Federal Reserve Board and the

Comptroller of the Currency's office (clearly uncomfortable about the prospect of getting caught in the crossfire). The latter office r e ~ a t e s nationally charteredcommercial banks.

The bankers sat in .a pin-striped mass toward thecenter of the room while CAR members took their seatson either side, as Federal Reserve Assistant Vice President Ronald Gray opened the meeting by saying hehoped it would prove "constructive." Then neighborhood representatives took the floor.

The neighborhood agenda revolved around the needfor commercial lenders to explore and creatively meetthe credit needs of multiple dwellings and mixed-use(commercial and residential) buildings, particularly inthe area of upgrading heating systems and repairingwindows and roofs. CAR members stressed three majorpoints:• Existing government-subsidized lending programslike the city's "8-A" program (which finances "moder

ate rehabilitation" costs at three percent interest) andParticipation Loan Program (which provides a portion

- often more than half - of the loan in federal dollarsat one percent interest), and an alphabet soup bowl of

other government initiatives, cannot alone meet-neighborhoods' credit needs. The 8-A program was cited by

Northwest Bronx resident Anne Devenny as "too limited and too expensive." The Participation Loan Program was cited as virtually useless without increasedinvolvement on the lenders' part. Neighborhood representatives urged the use of such programs to leverageand supplement conventional lending, not to preclude it.• Commercial lenders should allocate resources for the

serious enforcement of "good repair" clauses in multi

ple dwelling mortgage agreements. Such clauses stipulate that owners must make needed basic repairs within

a given period upon notice from the lender. Failuredo so can theoretically result in foreclosure or the bance of a loan being "called in." That prospect, CAmembers contended, would provide a powerful incetive for proper maintenance.

• Financing the upgrading of basic systems in labuildings, can if handled creatively, be to the long teadvantage of tenants, owners and lenders. One exaple, a 92 unit building on Grand A venue in the Bron

was presented at the meeting by Bill Frey of the Norwest Bronx Community and Clergy Coalition.

The building, Frey explained, will soon be renovatthrough a ten year, 12 percent loan of $139,000 negoated with Aetna Life and Casualty, and a supplemen15 year, three percent loan of $104,000 through the 8program. The total $243,000 rehab loan will be used new windows, a new boiler, an upgraded roof, and overhauled garbage compacter, along with other cosmtic repairs.

Frey itemized the building's total annual costs and come, both before and after renovation. His figur

showed a projected yearly net operating income$68,000 for the building after rehab, a $35,000 increaAfter mortgage interest payments, Frey projected, tbuilding'S annual net profit will exceed $35,000. Tfigures showed about half that amount will accrue froa "J-51" city tax abatement, which absorbs 90 perceof rehabilitation costs over a 12 year period, and has far mostly benefited commercial and luxury housing dvelopers. In addition, the building's tenants will havepay an average $20 per month rent increase. Frpointed out that the projected figures did not inclufuel savings that will result from the building's weathezation. Beyond the list of encouraging figures, he sa

the project "will keep 92 families where they are, anda decent building."

•The bank represeQtatives, after some promptin

responded by allegiJ;lg a series of "constraints" to mulfamily lending.

One of theftrst obstacles cited was the continued exitence of rent regulations in New York. Stated one commercial representative: "Banks won't make mortgagloans unless the bottom line on the buildings can suport it." Limits on rental income, he contended, limit a

owner's ability to payoff loans.

Later, in a related but somewhat contradictory statment, a bank spokesman cited tenants' inability to pamore rent as an additional constraint on mortgage lending.

In addition, the bankers said they were caught inCatch 22 due to the unfortunate confluence of baddeteriorated buildings and unreliable owners. Landlordwho have been milking their properties, they contendewould pose the greatest risk to potential lenders.

Finally, the lender representatives pointed out th

17 CITY LIMITS/June·July 19



prohibitive effects of current sky-high interest rates.While conceding the latter two points as possible

obstacles, CAR members insisted that lending decisionsneeded to be made on the merits of individual cases.And during one telling exchange, Ronald Gray agreed.

•During much of the session, Gray and his colleagues

from the Federal Reserve and Comptroller's offices

filled awkward silences with talk of the Community Preservation Corporation, a mortgage pool with reducedinterest rates begun in 1974 by the major commercialbanks which now has 22 members. The Corporation hasfinanced rehabilitation projects in a number of 'transition' neighborhoods.

Bank representatives lavished praise on the corporation's achievements, often launching into discussions of

other "special" neighborhood lending projects. Eventually, Bill Frey of the Northwest Bronx vented CARmembers' frustration, saying pointedly, "CPC is aresource. And there are 12 other resources in this

Low IncomeGrants to Historic AreasFund grants will range from $20,000 to $50,000. For

each award, the grant will be coupled with a low interestloan in an equal amount. The funds are intended to provide a significant portion of the equity capital neededfor a community organization to undertake a majorrehabilitation. project. Projects must be rehabilitationefforts directly beneficial to low and moderate incomeresidents and located in an area where displacement of

those residents is going on. The location must also be ina National Register Historic District, or eligible for theNational Register.

Grants to community groups initiating neighborhoodrehabilitation projects will be made by a new foundation established by the National Trust for Historic Preservation. The Inner-City Ventures Fund will promoterehabilitation projects by community organizations thatpreserve buildings in low and moderate income neighborhoods.

For a copy of the application, and more information,write to: National Trust for Historic Preservation, 1785

Massachusetts Ave., N.W., Washington, D.C. 20036. 0

CITY LlMITs/June·July 1981 18

room." Minutes later, when a Chemical Bank spokes

man 1aunched back into a discussion of "special" reinvestment programs, Frey lamented: " I f you were talking about financing a luxury multi-family rehab on nnd

Street and Second Avenue in Manhattan, you wouldn'tbe talking about '223-f' and '8-A' and CPC. You'd begoing in there to make a deal."

To which the Chemical spokesman replied: "You're

probably right."

At that point Gray abandoned his role as mediator.The failure to give equal consideration to loan applications in different areas, he said, "i sprima/acia evidenceof discriminatory action that we would have to take avery careful look at." Gray told the bankers that theymust "look at each individual loan and the creditworthiness of that loan," adding the qualification that

"there is a difference between credit availability andincome-support."

•

As stated earlier, so far only Chemical and Manufacturers Hanover Trust have expressed a willingness to

follow Gray's advice when financing multiple dwellingrepairs. Still, CAR members consider that step to be avictory for the city's neighborhoods.

Meanwhile, as the first sweltering days of summer settle in and the streets and stoops come alive, brokenboilers, loose windows and uninsulated roofs are of little immediate concern to most people. The winter'scrowded armories are a distant and best-forgotten image. And when will all of New York's commercial lenders make a serious committment to invest in neighborhood multi-family housing?

Maybe on a cold day in July 0

New Homeowner Repair Fund

New York City homeowners whose incomes qualifythem for participation will get a crack at a new pot of

home repair loan funds to improve the weatherizationof their buildings. The funds available combine privatebank commitments with a $1.5 million federal grant.

The funds will be used to provide federally insuredhome repair loans of up to $10,000 at a below marketinterest rate which housing officials expect to be in thearea of nine percent.

The funds were awarded to the city as a federal UrbanDevelopment Action Grant. The city had requested a $4

million grant from the government to be matchedagainst a commitment of $15 million from a number ofprivate banks. With the amount awarded, the city housing department expects to be able to make approximately 500 loans.

The loans will be available in some 20 "transitional"

neighborhoods in the five boroughs ,all of which havelarge numbers of small homes. 0 T.R.



Rent ControlsFace Troubled Watersin Albanyand'in Washington

It was a difficult spring for rent controls, both inAlbany and in Washington. Local and nationallegislative opponents were working hard to groom apartment

rents to join oil, gas and airplane fares in the retirementhome for deregulated consumer price safeguards.

The biggest attention focused on the United StatesSenate, where New York's newest Senatorial offering,Alphonse o Amato successfully moved a favorite bit ofanit-rent control legislation through the Banking Committee and the full Senate. O'Amato's amendment tothe Senate housing bill, which contained several other

deep cuts in housing spending, calls for localities thatcarry rent control legislation on their books to be barredfrom receiving housing assistance funding. In New YorkCity, where 900,000 apartments are regulated under therent stabilization system and another 300,000 are rentcontrolled, O'Amato's bill could cost the city its entire$200 million allotment for new construction and rehabilitation of low income housing.

Meanwhile in Albany, the odds have also been improving on the chances for major pro-landlord changesto be instituted in tenant protection legislation. Landlords have mounted a well-heeled and organized campaign on a statewide level to fight for unrestricted renthikes in apartments which are vacated. Landlord organizations appear to have concentrated their firepower onthis aspect of legislation, known as vacancy decontrol.Across New York State this spring, radio commercialshave blared out the landlord message that upstate taxpayers are carrying the load for renters in the city. Thestrategy has apparently paid off, judging crom thenumber of editorials endorsing the land Ior 1S' pro

posals.Another piece of tenant legislation, the Emergency

Tenant Protection Act of 1974, extended three years agoto shield apartment dwellers from rent gouging and

poor services, is also up for grabs. I f no extension is approved, this bill would expire June 30.

"The line this year, even with the pro-tenant legislators, is to throw the landlords a bone," said MichaelMcKee, legislative representative of the New York Tenant and Neighborhood Coalition.

Two pieces of legislation that would strengthen tenantprotection are facing a difficult battle. One, the Flynn

Oearie bill, calls for a building by building review of

landlord ' rent increase requests and would insititute afive percent cap on rent hikes. Another piece of legisla-

tion would switch regulation of rent stabilized refrom the landlord group, the Rent Stabilization Assoation, to the state of New York, along with othchanges in rent administration.

Most optimistically, tenant lobbyists expect a two-

three year extension of the ETPA with no strengtheniamendments.

Landlords in New York were buoyed and elated the success of O'Amato's anti-rent control bill in Waington. "We are seeing now the light at the end of

tunnel," said William Moses, chairman of the Comunity Housing Improvement Program, Inc., a lanlord organization.

Tenants, however, kept up their end of the debaOver 700 tenants and supporters marched in front o

Helmsley Palace Hotel on June 6th in favor of increastenant protections. 0

Planning Organization Founded

A new national organization' of urban planners launched in Washington, O.C. in early May. The orization replaces the informal affiliation planners held through the Planners' Network newsletter. new group articulated concern; fn a statement ofpose, for the elevation of property rights imd profitaity over human needs and advocated the use of plannskills and techniques to help eliminate inequalitie

wealth and power.A number of project committees were also initiaThey are in the areas of housing and neighborhoocommunity-labor coalitions and local planning, studorganizing, affirmative action, community econodevelopment, environment and growth policy, reindtrialization ,and health and human services.

A workshop on housing and neighborhoods stresthe need to remove housing from the private markepromoting public and, other not-for-profit ownersbased on use rather than speculation. I t called forcreased public financing of housing and public conof land coupled with greater residential control

neighborhoods . The group intends to develop ,a progsive housing reader, support the National TenaUnion and publish a popularized version of the housposition paper prepared for the conference.

The New Area Planners Network will continue tosent the monthly Network/Forum series at the CUGraduate Center, which for the past two years presented films and speakers on the historic devement of cities and issues in New York. People wishmore information should write to: Tony SchumanWest 22nd St., NY, NY 10010. 0

19 CITY LIMITS/June-July 1



6.914-997-1534

GIBSON WINDOWS, INC.'We Can Save You Money"

Minority Owned

Distributor ofThermal Break

Alum DHA2.5

HP90Windows.

Also storm win-

dows and doors.

Privately Managed

City Buildings Are SoldThe sale of the first nine city-owned properties under

the Private Ownership Management Program (POMP)

took place early in June, heralding a second closing

planned for ten more buildings in the fall.

Located in West Harlem and the northern section of

the Bronx, the nine buildings were sold to the Bronx

based Stephen Leon Management Company, the first

firm to participate in the city's POMP program, for

$395,000. The average apartment price was $775.

The city is still negotiating with its second POMP

buyer, Lemle and Wolff, Inc., who has been managing

340 units in ten buildings, all in Manhattan's Inwood

Washington Heights area , since November, 1979.

Created in June, 1979, POMP received $2.1 millionthis past year in federal Community Development fundsto operate and maintain some of the city's better tax

foreclosed (in rem) housing with the aim of selling it to

the managers in a year's time after a modest building"treatment" plan is carried out .

~ ~ ~ ...... / ~ . / ..... .............~ ~ ~ ~ I I

At present, there are five participating management

firms in the program with a total of 40 buildings, 1,469

units, and its current CD budget is expected to increase

to $2,850,000.

I TaskI I

The rents in the northern Manhattan buildings are

currently being restructured. The new, considerablyhigher rates are effective July 1.

Some tenants are receiving rent boosts of almost 300

percent, as in the case of Frank and Lyn Swinsky of 115

Post Avenue, where the monthly charge will jump from

$97 to $285.I Ii Gm/-Owned ii ILL ii Property i

For the past few months, the Inwood PreservationCorporation, a local nonprofit tenant advocacy organi

zation, has been negotiating with HP D to keep the rent

restructuring process under control.i Has A New Office i40 Worth Street, Room 1215,

About 20 percent, or 70 tenants in the tota l 340 units,

will not be able to afford the new rents. They will

receive abatements under the existing Section 8 or SenNew York, N.Y. 10013 619-Q48()

L J ior Citizen Exemption programs. D S B_~ ~ " " " " " " " " ' ' ' ' ' ' ' ' ' ' ' ~ ~ ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' / ' ' ' ' ' ' / ' ' ' ' ' ' / . . . . - . ; ; o ' ' ' ' ' ' ' ' A . .

TUFTS Intensive 3-day courses for Banks and Community Reinvest· Please send me informa-mid-career professionals ment, June 15-17

tion on Tufts Summer In-SUMMER U s i n ~ the Media in Urban and

focus on urban and en- EnVironmental Policy, June 22-24 stitutes in Urban and En-

INSTITUTES vironmental problems and Community Energy Planning, July vironmental Policy.13-15opportunities of the 1980s. Management Skills for Planners Name

IN URBAN Taught in Boston by and Public Administrators, July

university faculty and15-17,19-21

AddressAND Hazardous Wastes, Issues, Prob-practicing professionals, lems, and Career Opportunities

ENVIRON· the institutes combine in the Eighties, July 27-29PublidPrivate Partnership: New

MENTALpractical approaches and Opportunities and Techniques for zipskill-building with study of Urban Develocment, August 3-5

Return to: Department ofenetic Techno ogy, Public Health,

POLICY major economic, social, and the Community, August 10-12 Urban and Environmentalapd technological trends. Policy, Tufts University,

Medford, Mass. 02155

CITY LlMITs/June·July 1981 20





Displacement· FROM PAGE THREE

• Contrary to HUD, which claimed that revitalization

(gentrification) helped bring about beneficial integra

tion in communities, the Legal Services report found the

opposite to be true. In four Washington, D.C., neighbor

hoods, the black population was almost wholly replacedby a white "reinvasion." In addition, the report cites

evidence from Boston, Philadelphia and New Orleansof racial intransigence on the part of the "gentrifiers."

The Legal Services' study does not quarrel with the

HUD argument that housing abandonment and disin

vestment have brought about a good deal more displace

ment than the reinvestment activity under scrutiny here.

But, whereas HUD stops there, as though that finding

alone eliminated . he argument of those decrying dis

placement by revitalization, that is exactly the point

where the discussion begins.

The HUD report stated: "The critical importance of

urban revitalization to all city residents is evident. Ur

ban blight continues to eat away at the limited supply of

decent affordable housing for lower-income households, shifting the old, the poor and minority residentsfrom one neighborhood to another with little or noim-

provement in their living conditions."

V iewed from New York City, with its immens'e tracts

of blasted urban earth and buildings, and with astill blooming public/private revitalization nibbling at

selected fringe areas of that blight, the false innocence

of the HUD claim is especially galling. I f such revitaliza

tion was the preserver of decent homes for lower income

households, then the emphasis would be correct, but it

is precisely because the opposite is true that revitaliza

tion/gentrification needs public scutiny and govermpent

action. The conversion of boarding houses into tasteful

ly furnished one-family homes, of apartment buildings.

into luxury co-ops, and the resultant rise in .property

values and rental costs are not, and cannot be, the salvefor the wounds of more than twenty years of govern

ment-assisted destruction of poor neighborhoods.

No one thus far, to our knowledge, has claimed that

the tide has been fully reversed, that abandonment and

disinvestment are at an end. That indeed would sound

foolish. Too many buildings still decay, burn and empty

in too many neighborhoods for that to be true. What

has been said, rather, is that the tideis

turning, that aneasily detectable trend is underway. Unchecked, or

worse, encouraged, then even the grimmest predictions

are conceivable: of middle and upper-middle income,overwhelmingly white, city cores, conveniently close to

work in the citys' capital intensive industries, close byexpensive shopping playgrounds created with govern

ment largesse, where residents sleep peacefully, secure

in the knowledge that the mainly black and Hispanic

poor are miles away, ringing the city in Soweto-like en-

CITY LlMITSlJune.July 1981 22

claves, in the South African manner of urban planning.

The city line, in this scenario, is always well guarded.

It is just such "flights of fantasy" that housing offi

cials find so maddening. Examine the facts, they insist,

no such ~ o v e m e n t , conspiratorial or otherwise, is

unqerway.What is not fantasy, however, is that gentrification is

an unrelenting market force. It gives neither:'quarter nor

compromise. Each neighborhood storefront, apartment

building and home in a community undergoing revitalization will eventually shake out in, he market place and

its new found value received. LeGates and Hartman cite

a number of neighborhoods where the market dynamic

created by renewed middle and upper income interest

continued, unabated, until whatever economic and

racial mix had existed previously was leveled into a

homogenous population of the young, white, and mid

dle class.

Both HUD's and Legal Services' reports focused only

on the urban pioneer neighborhoods that have come

under academic scrutiny. These have been mainly white

ethnic working class areas, with little abandonment.

"With only rare exceptions," assert LeGates and Hartman, "gentrification currently involves whites moving

into white or primarily white neighborhoods." Seventy

to 90 percent of those displaced in studies used by

LeGates and Hartman were white. However, many acti

vists, the report notes, spoke of a "second generation"

gentrification, which progresses into more deterioratedareas, often largely black.

New York City appears to follow a similar pattern,

although none of its neighborhoods have gotten the full

weight of academic study and are not included in either

report. As the mostly white areas of neighborhoods

such as Brooklyn's Park Slope or Boerum and Cobble

Hill in the borough's Brownstone Belt reach almost sat

urat ion level, and costs become prohibitive to all but the

upper-middle income, new waves of settlers go shopping

in the Urban Pioneer Supermarket of adjoining black

and Hispanic neighborhoods, bringing with them the

same high prices they sought to avoid as well as an integration at the expense of incumbent residents. It is a

confusing phenomenon, made more so by the fact that

for many of us involved in community activism, gentri

fication often wears a face very much like our own.

I f ntegration is occurring as a result of gentrification,

point out LeGates and Hartman, "it by definition in

volves integrationat

the expenseof

blacks who arepushed out." Even in the areas where neither the gentry

nor the black and Hispanic residents have the upper

hand yet, whatever integration exists is decidedly unpeaceful, as groups of the new gentry organize aggres

sively to limit the options of their poorer neighbors by

vigorously opposing government housing assistance in

the community. These campaigns, present in several New

York City neighborhoods, have all the racial tolerance of

a White Citizens Council meeting in Georgia circa 1962.





~ - ~ ---- - - . - ~ - -

• A Game of Numbers in Harlem

• ABlock on the Lower East Side

• Gentrification:What Can Be Done?

• Displacement Studies: From Both Sides.Now

City Limits Magazine, June/July 1981 Issue

Documents